Resurgent ZSE recovers in September

Published: 04 October 2019

The ZSE added $8.78 billion in value during September as the local bourse closed the month 40% higher and the third quarter 14% higher. Overall, in nominal terms the month yielded 45 gainers and 3 fallers, and in USD terms 20 counters closed higher and 35 closed lower

It was an eventful month on the market, as the accelerated depreciation in the parallel market triggered a bull run under rising activity as investors once again sought value preservation in listed equities. The rush saw the Industrial Index briefly trend above 800, setting a new all-time high in the post dollarization era at 809.67.

Prior to the spike, the market had been on an extended losing streak, with observers pointing to an apparent lack of liquidity and the weak economic outlook as factors. During that period market capitalization fell below US$2 billion for the first time since April 2009, at the onset of dollarization. Expectedly, the blue chip counters have been at the forefront of the resurgence, although a number of mid-tier stocks have also captured some upside from the sentiment shift.

The developments closely mirror the sudden bull run experienced in October 2018, where the market closed the month 42% higher following the separation of Nostro and RTGS accounts. The major difference is that the seemingly short liquidity on the market. That factor combined with the apparent force behind the surge means the sustainability of the markets current trajectory is uncertain. Interestingly, market analysts had been pointing out undervaluation in a number of big caps in the build up to the surge. This undervaluation in what looks like a buyer's market should see a greater emphasis on otherwise overlooked mid-tier stocks, particularly those with foreign currency earning operations (Ariston, Proplastics, Bindura Nickel) or those with dominant market positions (Dairibord, Afdis, Simbisa, OKZim).

At the close of the month, market capitalization stood at $30.53 billion, up 40% from August. In US dollar terms, according to the interbank market mid-rate at the end of September, the figure stood at US$2.01 billion, down 1% from August. In terms of activity, market turnover reached $166.6 million, up 53% from August with 335 million shares traded. This translated to US$11 million, which was an 8% rise from the previous month's equivalent of US$10.2 million.

All the mainstream ZSE indices closed the month and quarter in the black. The All Share Index gained 40% to close at 232.52 and closed the third quarter 14% higher. The Industrial Index closed at 774.55 after gaining 40% during the month and closed the quarter 13% higher. The Minings Index gained 21% and closed the quarter 24% higher at 317.75. The Top Index reflected the resurgence of the big cap counters, rising 46% to close September at 218.09, up 11% for the quarter, although the YTD at 50% suggests big cap stocks are yet to fully recover from the August slump.

Consumer stock Simbisa Brands led the month's top gainers with a 167% rise as added 91.95 cents in nominal value while its USD value rose by 91% to 10 USc. Another consumer linked stock followed as OKZim added 139% in nominal value to 70.37 cents, while its USD value rose by 70% to 5 USc. Dual listed PPC gained $2.2434 in value as it rose by 112% in nominal terms while its real value rose by 51% to 28 USc. Proplastics, which recently completed its capacity extension project, gained 84% in nominal value, leaving its YTD at 259%. Mining stock Bindura Nickel rounded up September's top gainers with a 71% rise in nominal value which translated to a 22% rise in its USD value to 1.2 USc.

Beverages manufacturer Afdis led the month's top fallers with an 8% decline in nominal terms while its USD value fell by 35% to 11 USc. Gold miner RioZim closed 2% lower after losing 4 cents in value while the shares USD price fell by 30% to 14 cents, although its remained in the black for the year at a YTD of +15%. Industrial holding TSL lost 1.25 cents during the month, leaving it 30% lower is USD terms at 5 USc. - online